Sections
Key Terms
Key Terms
- aggregate production function
- the process whereby an economy as a whole turns economic inputs such as human capital, physical capital, and technology into output measured as GDP per capita
- capital deepening
- an increase by society in the average level of physical and/or human capital per person
- compound growth rate
- the rate of growth when multiplied by a base that includes past GDP growth
- contractual rights
- the rights of individuals to enter into agreements with others regarding the use of their property providing recourse through the legal system in the event of noncompliance
- convergence
- pattern in which economies with low per-capita incomes grow faster than economies with high per-capita incomes
- economic growth
- a sustained increase in the production of goods and services
- human capital
- the accumulated skills and education of workers
- Industrial Revolution
- the widespread use of power-driven machinery and the economic and social changes that occurred in the first half of the 1800s
- infrastructure
- a component of physical capital such as roads, rail systems, and so on
- innovation
- putting advances in knowledge to use in a new product or service
- invention
- advances in knowledge
- labor productivity
- the value of what is produced per worker or per hour worked; sometimes called worker productivity
- modern economic growth
- the period of rapid economic growth from 1870 onward
- physical capital
- the plants and equipment used by firms in production; this includes infrastructure
- production function
- the process by which a firm turns economic inputs like labor, machinery, and raw materials into outputs like goods and services used by consumers
- rule of law
- the process of enacting laws that protect individual and entity rights to use their property as they see fit; laws must be clear, public, fair, and enforced, and applicable to all members of society
- special economic zone (SEZ)
- area of a country, usually with access to a port where, among other benefits, the government does not tax trade
- technological change
- a combination of invention—advances in knowledge—and innovation
- technology
- all the ways in which existing inputs produce more or higher quality, as well as different and altogether new products